Sarasota Quay property to hit market

Attorneys representing the Irish government say they hope to soon lure a buyer willing to pay $40 million to develop the vacant waterfront site.

By JOSH SALMAN

One of the most prominent urban properties in Florida will hit the market for sale following a four-year foreclosure saga.

The Irish government, acting as receiver for the defunct Anglo-Irish Bank, repossessed the former Sarasota Quay property Monday after no other bidders made a viable offer at its long-awaited foreclosure auction, court records show.

The acquisition caps years of limbo for the 15-acre bayfront property, considered one of the most coveted along the Gulfcoast of Florida. Once planned for a $1 billion mix of condominiums, retail space and hotel rooms, the tract is worth only a fraction of the $100 million that Anglo-Irish has into it.

But attorneys representing the Irish government said there has been considerable interest in developing a luxury resort there. They hope to soon lure a buyer willing to pay $40 million to develop the vacant waterfront site.

"We have cleared all of the hurdles to finally bring this property to the market," said Paul Shelowitz, a Miami attorney representing Irish Bank. "There's been an extraordinary amount of interest shown by developers and land purchasers."

A holding company created by the Irish government filed the winning bid of $100,001 to seize the site between the Hyatt Regency and Ritz-Carlton hotels, where Tamiami Trail meets Fruitville Road.

Because the lender was awarded a foreclosure judgment for more than $100 million in damages, the bank would only have had to pay out-of-pocket on bids that exceeded that judgment value.

Irish Bank set an automatic maximum bid of $15 million to hang on to the lucrative asset. If a third-party bidder made an offer below that price, a computer would automatically file an offer from the bank at $1 more to beat it. Offers above $15 million would have stopped the process for the government-owned bank to consider.

But no third-party buyers were willing to even come close.

The new owner is National Asset Sarasota LLC, a company set up by an agency of the Irish government, which had acquired assets of the defunct bank. The court is scheduled to release the certificate of title within the next week.

National Asset already has hired a high-profile commercial real estate brokerage in Miami to market its new property to potential suitors around the globe, with the $40 million initial asking price.

"Not long ago, these properties were assembled for double that," said Ron Kriss, a real estate attorney also working on the deal for Stroock & Stroock & Lavan LLP. "Of course, the market has changed drastically. But it also has improved of late. The cranes are back."

Built in 1985 and once home to a nightclub, Japanese restaurant and clothing boutique, the Sarasota Quay was razed in 2007 to make way for grand visions of a mix-used community.

A group of developers from Dublin planned to build nearly 700 luxury condos, a 175-unit hotel, about 100,000 square feet of restaurants and shops, plus 39,000 square feet of offices on the property.

But like many projects of its kind, the company's plans faltered during the Great Recession.

Irish American Management Services Ltd. eventually defaulted on its loans in 2009, as the Florida housing market crashed and Europe spiraled into financial crisis.

Anglo-Irish bank also collapsed from the weight of bad real estate loans and was absorbed in 2010 by the government-run Irish Bank.

The default became even more muddled when two companies claiming rights to the Quay property filed a lawsuit to block the bank's foreclosure, claiming they had unrecorded mortgages and liens worth nearly $10 million. A settlement was reached on that case in late May.

Now that the bank owns the site free and clear, the Quay is closer to being redeveloped than any time since the downturn.

While most agree the property will not fetch the bank's asking price of $40 million — or about $61 per square-foot — they believe the timing is right for a new buyer to arrive with a respectable offer.

"The bank knows people are clamoring to get it, but they're not going to pay that price," said Barry Seidel, president and founder of American Property Group of Sarasota Inc. "It could be one of the most spectacular properties in Sarasota if the right developer gets it."

Since the Quay's foreclosure, competition for nightly visitors and luxury condo buyers alike has grown more fierce.

A Palm Beach developer filed plans with the city of Sarasota earlier this year to resurrect its Grand Sarasotan project, which calls for a 275-room hotel that would carry the Weston flag and 144 condos in twin 18-story towers.

Kolter Group LLC, which bought the land for a record $40 million in March 2005, is likely to invest roughly $300 million to develop the land at U.S. 41 and Gulfstream Avenue.

Harnessing the rebounding home market, developer Tom Mannausa also is slated to break ground this year on an 18-story tower known as "The Jewel" at Gulfstream Avenue and Main Street.

Both of those luxury residences are likely to rise before the Quay attracts a new buyer. The lofty cost of the land, coupled with millions of dollars of site-work required before a developer can go vertical, makes the Quay property a much more arduous task, said Jack McCabe, a real estate analyst in Deerfield Beach.

Still, McCabe predicts the site could be heavily contested among ambitious buyers sensing its potential.

"It will be really interesting to see what developers surface in this," McCabe said. "This could go for a price that could astonish many people. You can make a strong argument that it is one of those rare and unique properties that just can't be duplicated."

If a reborn Quay hosts a hotel, area tourism officials expect the market could easily absorb the added rooms, especially given the recent growth in the sports tourism sector.

They also would like to see consideration given again to a conference center on the site, though that has become less feasible than when it was first proposed years ago because county bed taxes are no longer a funding option.

"The timing could not be better," said Virginia Haley, president of Visit Sarasota County. "Even if we don't get the conference center, if the hotel were to have a large ballroom or meeting space, it would give us a lot more options."